Expert Opinion

Moscow region to become centre of Russian technical textiles production

The Moscow region is expected to become one of the centres of the Russian technical textiles and nonwovens production during the next several years, due to the ever improving investment climate and the increase in state support, according to leading Russian analysts and technical textiles producers.

In recent years, the development of technical textiles industry has become one of the priorities for the Moscow city government. This is confirmed by the statements of local officials. According to an official spokesman of the department of economic policy and development of Moscow, last year more than 30 local technical textiles and nonwovens producers received support from the Moscow city government, and there is a possibility that the same policy will be implemented this year.

The provided support is mostly in the form of tax incentives and benefits. According to the Moscow city government, it means that tax burden against some local producers of technical textiles and nonwovens, which production facilities are located within the territory of the city, was reduced by 17-25%.

It is planned that this year another 28 companies, specialising in the technical textiles and nonwovens production, will receive the support from the Moscow authorities.

According to Maxim Reshetnikov, head of the Moscow Department of Economic Policy and Development, the development of technical textiles industry in recent years has become a priority not only for the Russian federal government, but also for the Moscow regional authorities, which is reflected in the design of benefit packages, aimed at producers.

As part of these plans, Moscow authorities plan to establish up to 10 technology parks and technopolises that will provide tax- and other benefits to their residents, as well as reduced rents and consultation services, while the priority will be given to the domestic producers.

At the same time, the list of the proposed benefits also includes the abolishment of income tax, property tax, land tax, as well as the reduction of land rent.

It is reported that R&D support in the implementation of these plans will be provided by the Moscow State University, one of Russia’s largest and most prestigious higher education institutions, which has recently announced its plans to invest in R&D activities in the field of nonwovens and technical textiles.

Currently, the Moscow technical textiles industry is comprised of several large-scale enterprises, probably the biggest of which is Thermopol, one of Russia’s leading producers of nonwovens.

Implementation of these plans will be part of the existing regional programme, which is known as The support the real economy for import substitution within the territory of Moscow city and the Moscow region, and which was launched by the Moscow city government in the beginning of last year, with the aim to ensure import substitution.

In exchange of support provision, investors in turn will be obliged to make commitments to invest at least 1 billion rubles (US$ 15 million) in the implementation of their projects within the territory of the Moscow city and the Moscow region during the next five years.

It is planned that the majority of future production will be supplied for the needs of the local market, as Moscow still remains the largest consumer of technical textiles and nonwovens products in Russia.

According to analysts of the Moscow Department of Economic Policy and Development, the consumption of technical textiles in the Moscow region will be steadily growing in coming years, due to the ongoing recovery of the Russian economy from the consequences of the financial crisis and the growth of demand for technical textiles from the major consuming industries, in particular, defence, which, according to predictions of analysts of the Russian Ministry of Industry and Trade, will consume up to 60% of the domestic technical textiles production in the coming years.

Still, despite Moscow being Russia’s richest region (in terms of purchasing power of local consumers) to date, rapid development of the local technical textiles industry has been challenged by serious obstacles.

According to the Department of Economic Policy and Development, the industry requires long-term investments, primarily in fixed assets, while the provision of state support will help to solve this problem.

At the same time, the lack of inter-city distribution network for raw materials, semi-finished and finished products to date has been another problem, which complicated the development of the Moscow technical textiles industry.

In the meantime, leading Russian technical textiles producers have already welcomed the plans of the Moscow city government to create conditions for the development of the city’s industry.

According to Andrei Razbrodin, head of the Russian Union of Textile and Light Industry Producers (Soyzlegprom), a public association, which unites Russia’s leading textile and technical textiles producers, in recent years leading Russian producers have managed to keep the same production volumes as in the past, despite the financial crisis and its consequences in Russia; however, they were not able to achieve any growth.

According to Soyzlegprom, the decision of the Moscow city government to provide significant benefits to those producers, which are willing to make significant investments in the city’s technical textiles industry, should significantly improve the situation in the entire Russian technical textiles industry and will provide an impetus for its further growth.

Analysts believe that Moscow could become one of the centres of the Russian technical textiles and nonwovens production in the coming years and to overtake Tatarstan Republic, as well as some other regions in the Russian Ural and Siberia, which are characterised by rich raw materials base.

This should also help to implement ambitious state plans to increase the share of domestically-made technical textile products from the current 25% to about 60% of the market.

Eugene Gerden is an international free-lance writer, who specializes
in covering global technical textile and non-wovens industry. He worked for
several industry titles and can be reached at gerden.eug@gmail.com.